Commercial Lease Clauses Checklist UK

The term is not just a number of years. It decides whether your fit-out pays back, whether rent review lands before the site has proved itself, and whether goodwill will be trapped in a location you may not be able to keep.

• Check the lease length against your business plan, fit-out payback and likely break-even period.
• Check whether rent review dates arrive before the site is mature.
• Check whether the lease is protected or contracted out, and whether the contracting-out formalities were completed before the tenant became bound.
• Check whether any side letter, early access arrangement or agreement for lease changes the timing or expiry mechanics.

• Contracted-out wording buried in the boilerplate and treated as routine.
• A long fixed term with no clean tenant break and weak exit rights.
• Expiry assumptions based on heads of terms rather than the final lease structure.
• Completion or occupation before the formal contracting-out steps are finished.

• Ask for a protected lease where location matters and goodwill is expected to build.
• If flexibility matters more than renewal, negotiate a shorter term or a cleaner break instead.
• Align the term with fit-out economics, incentive periods and rent review dates.

The base rent is the visible cost. The deposit is the stress test. Both need to work with the cash flow of the business, not just the landlord's template.

• Check annual rent, VAT position, payment frequency, default interest and whether other sums are drafted as rent.
• Check whether the lease assumes quarter days and whether that works for your cash flow.
• Check when any rent-free period starts, what it covers and whether it can be clawed back.
• Check the rent deposit deed for drawdown triggers, notice requirements, top-up periods, interest and release mechanics.

• Broad administration charges or undefined interest wording.
• Service charge and insurance both recoverable and also described as rent.
• A rent-free period that falls away on break or assignment without clear drafting.
• A deposit that secures every obligation and survives indefinitely with no release route.

• Push for monthly payment if quarterly rent creates unnecessary pressure.
• Narrow default interest and administration wording.
• Make drawdown available only for defined arrears or specific losses, with notice first.
• Set a clean release trigger for the deposit, such as a fixed payment-history period, assignment or covenant-strength improvement.

Rent review is where future occupancy cost is hidden in plain sight. The label matters less than the formula, the assumptions and what the clause ignores.

• Identify whether the review is open-market, index-linked or a fixed uplift.
• Check the assumptions and disregards, especially whether tenant improvements and goodwill are ignored properly.
• Check whether an index-linked clause contains a floor, collar, compounding effect or awkward base-month drafting.
• Check the dispute machinery, timing of the review memorandum and whether increases can be backdated with interest.

• The clause only moves one way in practice and the drafting is presented as market standard.
• No disregard for tenant improvements or tenant-funded fit-out value.
• RPI or CPI language that compounds without any cap or collar.
• No practical route to resolve valuation disputes quickly.

• Exclude tenant improvements and goodwill from the valuation assumptions.
• Add a cap or collar where the review is index-linked.
• Make the timetable, expert process and backdating rules commercially workable.

Most failed tenant breaks fail because the conditions are too strict or the notice mechanics are mishandled. A break clause is only valuable if it works on the day you need it.

• Check the break date, last safe service date, permitted service methods and named recipients.
• Check whether the lease imports separate notice machinery through the boilerplate or section 196 wording.
• Check whether the conditions are limited to principal rent, giving up occupation and vacant possession, or whether they sweep in every disputed sum and covenant.
• Check whether rent apportionment is dealt with expressly if the break date falls between payment dates.

• A condition requiring payment of all sums due under the lease.
• A broad compliance condition with no cure period.
• Vacant possession obligations that collide with reinstatement or strip-out works.
• Notice clauses that rely on outdated addresses, strict methods or hidden service assumptions.

• Limit the condition to principal rent only, not disputed balancing charges.
• Remove general compliance conditions wherever possible.
• Add express apportionment of rent if the break date falls mid-period.
• Start break planning months ahead, not at the end of the quarter.

If one clause family quietly creates the biggest tenant liability, it is repair. Small wording changes such as keep or put and keep can make the difference between maintenance and a building upgrade.

• Check whether the tenant is only maintaining, or being required to put the premises into repair.
• Check whether structural elements, roof, plant, exterior and inherent defects are caught.
• Check that any schedule of condition is attached, cross-referenced and actually limits the covenant.
• Check how insured damage, uninsured damage and energy-efficiency compliance costs are allocated.

• Put and keep in good and substantial repair, with no schedule of condition.
• No distinction between internal repair and wider building liability.
• Broad wording that imports upgrade risk through repair, service charge or alterations.
• An older or obviously imperfect unit with no photographic evidence of condition.

• Limit the covenant by reference to a schedule of condition.
• Exclude inherent defects and wider building issues that are not a sensible tenant risk.
• Push for no better condition than evidenced at completion, subject to the agreed covenant.
• Check the current energy-efficiency position instead of assuming the landlord will carry all compliance cost.

These are the clauses most likely to turn an affordable lease into an expensive one. They need the same scrutiny as the headline rent because they can move sharply after signature.

• Check the services list, apportionment basis, management-fee methodology and whether you can see current budgets and prior accounts.
• Check whether there is a total cap or category cap, and whether reserve or sinking funds are included.
• Check excluded costs such as improvements, landlord financing, rent collection, empty-unit costs and investment management.
• Check what the landlord insures, whether terrorism is included, who pays the excess, and how rent suspension works for insured and uninsured damage.

• All costs and expenses wording with little transparency.
• The lease lets the landlord recover improvements, rebranding or empty-space costs from occupiers.
• No meaningful cap or accounting discipline.
• The tenant can still be on the hook for rent and repair even when the premises cannot be used.

• Ask for caps, category limits and clearer excluded-cost language.
• Request budgets, last year-end accounts and a clear apportionment explanation before completion.
• Add rent suspension for both insured and uninsured damage where appropriate, plus a termination right if reinstatement takes too long.

The use clause decides what your business can actually do from the premises. Alterations decide how much freedom you have to make the space work in practice.

• Check the permitted-use clause against your real operation, including storage, customer collection, deliveries, training or light production if relevant.
• Check that planning assumptions and lease permissions both line up.
• Check how the consent process works for alterations, including drawings, landlord professional fees and reinstatement.
• Check whether the landlord can insist on stripping everything out at lease end, even if the fit-out improves the space.

• Use wording that is too narrow for ordinary trading changes.
• Ignoring ancillary uses that are commercially essential but easy to overlook.
• Consent wording that allows delay, broad cost recovery or refusal without structure.
• Automatic reinstatement of all works at the end of the term.

• Widen the permitted use so it reflects the business you actually intend to run.
• Exclude minor non-structural and demountable internal works from the consent requirement where possible.
• Make landlord costs reasonable and require timely consent decisions.
• Limit reinstatement to works the landlord reasonably requires to be removed.

Exit flexibility is leverage. Assignment and subletting rules decide whether you can leave cleanly or stay financially exposed long after you have gone.

• Check whether assignment is only of the whole and whether subletting of part is allowed.
• Check whether the tenant can share occupation with group companies or service providers without consent.
• Check the consent conditions for assignment and whether the landlord can require an authorised guarantee agreement.
• Check whether additional deposits or guarantor demands can be triggered on assignment.

• An AGA is effectively automatic whenever you assign.
• No group sharing or concession route, even where the business structure may change.
• Subletting conditions that are so restrictive they are unusable in practice.
• The rent deposit or guarantee continues silently after assignment without clear release language.

• Limit when an AGA can be required and make the release point clear.
• Add a group-sharing right where the business might restructure.
• Keep assignment and subletting conditions reasonable so exit is commercially real, not theoretical.

End-of-term exposure is often ignored at the start of the deal, then discovered when the tenant has lost leverage. Yield-up wording is where many of those costs crystallise.

• Check decoration cycles, reinstatement obligations, make-good language and the final hand-back standard.
• Check whether the landlord has to notify the tenant before requiring strip-out or reinstatement.
• Check final service-charge balancing, insurance reconciliations and deposit release timing.
• Check whether the lease or side documents leave obligations running after expiry or assignment.

• A high yield-up standard that goes beyond the repair covenant.
• Open-ended strip-out obligations with no notice requirement.
• Final-quarter rent and balancing charges left to broad landlord discretion.
• A rent deposit deed or guarantee that quietly survives the commercial exit.

• Require the landlord to state reinstatement requirements in advance of expiry.
• Keep the yield-up clause aligned with the agreed repair standard.
• Document release mechanics for deposits, guarantees and final reconciliations.